Budget 2026-27: Govt ends federal excise duties on business class foreign travel

The federal government has announced major tax reforms in the Budget 2026-27, including relief measures for travelers, the auto sector, pharmaceutical production, and industrial manufacturing.

Business Class Travel Tax Abolished

A key announcement in the budget is the abolition of federal excise duty on foreign travel in business class. This change is expected to benefit frequent international travelers, especially business professionals.

Officials said the move aims to reduce travel costs and improve business connectivity and trade opportunities.

Support for Electric Vehicles

The government also confirmed that a new auto sector policy will be presented in parliament soon after cabinet approval.

Until then, existing tax incentives for electric vehicles will continue. These include benefits for electric motorcycles, rickshaws, cars, and buses.

A 1% sales tax facility has also been proposed for imported electric trucks. However, luxury high-priced electric vehicles will not be included in these incentives.

Relief for Pharmaceutical Sector

In the health sector, the budget has abolished taxes on the local production of medicines used for cancer and other serious diseases. This is expected to lower production costs and improve access to essential medicines.

Boost for Industry and Manufacturing

To support industrial growth, customs duty has been removed on more than 100 types of raw materials used in manufacturing.

Officials say this will reduce production costs, help local industries, and support exports from Pakistan.